Democracy under uncertainty: The wisdom of crowds and the free-rider problem in group decision making.

Abstract

We introduce a game theory model of individual decisions to cooperate by contributing personal resources to group decisions versus by free-riding on the contributions of other members. In contrast to most public-goods games that assume group returns are linear in individual contributions, the present model assumes decreasing marginal group production as a function of aggregate individual contributions. This diminishing marginal returns assumption is more realistic and generates starkly different predictions compared to the linear model. One important implication is that, under most conditions, there exist equilibria where some, but not all members of a group contribute, even with completely self-interested motives. An agent-based simulation confirms the individual and group advantages of the equilibria in which behavioral asymmetry emerges from a game structure that is a priori perfectly symmetric for all agents (all agents have the same payoff function and action space, but take different actions in equilibria). And a behavioral experiment demonstrates that cooperators and free-riders coexist in a stable manner in groups performing with the non-linear production function. A collateral result demonstrates that, compared to a -dictatorial‖ decision scheme guided by the best member in a group, the majority-plurality decision rules can pool information effectively and produce greater individual net welfare at equilibrium, even if free-riding is not sanctioned. This is an original proof that cooperation in ad hoc decision-making groups can be understood in terms of self-interested motivations and that, despite the free-rider problem, majority-plurality decision rules can function robustly as simple, efficient social Democracy Under Uncertainty 3 decision heuristics.

How does social information affect charitable giving?: Empathic concern promotes support for underdog recipient

“…When participants believed that their own choices were consistent with the majority's choice, 21% of them changed their choices to the less popular project, but all of the participants in the Minority condition retained their minority choice. Considering the robust phenomenon of majority-influence in social decision making (Hastie & Kameda, 2005;Kameda, Tsukasaki, Hastie, & Berg, 2011), the anti-conformity pattern here is the opposite of the typical social influence observed in many attitudinal judgments (Cialdini & Goldstein, 2004;Salganik et al, 2006).…”

Evolutionary Group Dynamics

“…Results from both computer simulations and laboratory experiments showed that the majority rule fared quite well, performing at levels comparable to much more computationally taxing rules. Furthermore, the majority rule outperformed the despotic best member rule, even when members were not forced to cooperate for group endeavor and free riding was possible (Kameda et al, 2011).…”

The dynamics of collective social behavior in a crowd controlled game

“…However, coordination might not be so desirable in this occasion. The problem with players conforming with the majoritarian direction or mimicking each other is that they will be subject to herding effects [50] [51] which in this particular setting can be catastrophic due to the lag present in the system. Indeed, if we set the probabilities in our model so that the next state in the transition is always the one that gets you closer to the exit but with 25 seconds of delay (that is, the probability of going from state x m to x m+1 is the probability of going from x m−n to the state which follows the optimal path), the system gets stuck in a loop and is never able to reach the exit.…”